RTX combines a $289 billion backlog and accelerating defense and aftermarket demand with strong execution, but its 29.3x forward P/E leaves only moderate base-case upside.
Overview
RTX is a diversified aerospace and defense conglomerate formed by the 2020 United Technologies-Raytheon merger and rebranded in 2023. Its dual-market model balances cyclical commercial aviation with more durable sovereign defense demand. Products contribute approximately 71.4% of revenue and aftermarket services 28.6%; the U.S. represents 54.0% of sales, while the U.S. government accounts for 36.1% and foreign military sales another 8.1%. **The investment case is anchored by a record $289 billion backlog**, comprising $170 billion of commercial and $119 billion of defense work, providing more than three years of visibility. Q2 2026 adjusted sales rose 14.5% to $24.71 billion, adjusted EPS increased 21% to $1.89, and free cash flow recovered to $2.88 billion from negative $72 million a year earlier. Management raised 2026 sales guidance to $95.0-$96.0 billion, organic growth to 8%-9%, adjusted EPS to $7.10-$7.25, and FCF to $8.50-$8.75 billion. The principal catalysts are defense munitions ramping, commercial aftermarket recovery, and improving GTF aircraft-on-ground metrics. However, at $210.74 and 29.3x adjusted forward EPS, valuation is well above the five-year average forward P/E of 20.8x, limiting near-term upside and leaving execution highly important.